Canada's jobs picture beats US: economists
Canada's jobless situation still trumps the unemployment picture in the United States despite March's unexpectedly poor showing in this country, economists say.
Canada has created more jobs, has more people working full-time and has more Canadians looking for work, all signs of a better jobs outlook in Canada.
"While the (March) results are no ball of fire, the big increase in full-time jobs, the rise in hours worked, a small uptick in average wages, and the dip in the jobless rate are all consistent with underlying improvement in the labour market," said Doug Porter, an economist with BMO Capital Markets, in a note discussing Canada's March employment numbers.
Beware the Ides of March
In the third month of 2011, Canada shed 1,500 jobs, a feeble result considering economists had expected employment growth in the range of 20,000 to 30,000 jobs for the same month.
"Today’s report is a disappointment. It is also at odds with the momentum that seemed present in the economy heading into March," said Craig Alexander, chief economist at TD Economics.
Still, the country's jobs situation is significantly improved compared with the previous year.
Overall, Canada has added more than 304,000 jobs in March 2011 compared with the previous March. That works out to a gain of 1.75 per cent when calculated against the employed workforce in March 2010.
By contrast, the U.S. economy added 218,000 jobs in March 2011, representing an overall gain of 912,000 new spots versus 2010.
As a percentage of people with jobs in March 2010, however, the U.S. gain was only 0.66 per cent, less than one-half the Canadian improvement.
Of course, comparing the employment situations by looking at any particular month is tricky, economists say.
"Too much should not be read into one month’s data report. The reality is that the monthly data can be quite volatile," TD's Alexander said.
And, the American economy fared better in terms of new full-time jobs.
Comparing March 2010 to the third month of 2011, the United States actually experienced a reduction in part-time work, down almost 500,00, and an expansion of 1.4 million full-time positions.
For the same months, Canada added almost 54,000 part-time positions and 251,000 full-time spots.
As a percentage of the number of people who had work in March 2010, however, Canada still held an advantage, 1.5 per cent compared with one per cent for the United States.
Thus, in the past year, Canada added more jobs and more full-time jobs as a percentage compared with the United States.
Everyone in the pool
Finally, Canada's labour force participation rate — the percentage of Canadians seeking work or holding jobs compared with the total population — has held steady at 67 per cent over the past 12 months.
That figure is historically high, according to Scotiabank economist Derek Holt, and generally represents growing confidence in the economy and the chance of getting work.
By contrast, the American labour force participation rate has slipped slightly March over March, 64 per cent versus 65 per cent a year earlier.
And economists said the three percentage points difference matters when you are examining the jobs effects in the two countries.
"Longer run, yes, Canada's unemployment rate could well shrink faster than the U.S. because the U.S. discouraged worker effect is so huge," said Scotiabank's Holt.
In other words, more Americans will start looking for work as that economy improves. Mathematically, that means the U.S. unemployment rate could well increase even as the national economy recovers, experts warn.